Mumbai, Sep 26: The Yes Bank board on Tuesday decided to seek at least a three-month extension for Rana Kapoor, managing director and chief executive, from Reserve Bank of India (RBI) beyond 31 January, 2019.
The RBI had last week curtailed the three-year term that the board had sought for Kapoor, also one of the promoters of the bank, to 31 January 2019, and asked the bank to find a replacement. The regulator offered no reasons for the curtailment of the term.
In a regulatory filing, the bank said Kapoor has been in his position since the inception in 2004 and finding a suitable successor is a “time-consuming challenge”.
“It was decided that Reserve Bank of India be requested for an extension up to minimum 30 April 2019 for finalisation of audited financial statements for fiscal year ending 2019; thereafter subject to RBI approval, up to September 2019 in order for the statutory AGM process to be completed,” it said.
To ensure a long-term succession plan, the board also decided to elevate senior group presidents Rajat Monga, who handles financial management, and Pralay Mondal, who heads the focus area of retail, as executive directors.
The board, which met at the bank’s corporate office here this evening, also established a search and selection committee comprising three members from the existing nomination and remuneration committee along with two external experts to identify Kapoor’s successor.
Meanwhile, Madhu Kapur, the wife of deceased co-promoter Ashok Kapur and also his legal heir, has written to the board asking Kapoor to be sent on leave till January 31 to ensure a fair search, sources said. She has also demanded a forensic audit of loans sanctioned under Kapoor’s leadership. Kapoor owns 10.66 percent of the bank, while Kapur owns over 8 percent.
The bank had last week disclosed that the RBI has curtailed Kapoor’s term by nearly two and half years. The board had reappointed him for a period of three years starting September 2018.
Kapoor is the second chief executive at a private sector lender after Shikha Sharma of larger rival Axis Bank to face regulatory wrath in terms of extension of CEOs’ tenure. Both the banks were found to have under-reported non-performing assets by over Rs 10,000 crore each for two consecutive years in regulatory audits conducted by the RBI.
The apex bank move has not gone down well with the investors and the bank stock has seen steep selling in all the trading sessions since the disclosure was made.
The Yes Bank stocks shed 2.83 percent to close at Rs 219.85 a piece, a fresh 52-week low, on the BSE on Tuesday, even as a few other lenders saw a surge in share prices. The stock lost almost 40 percent since the RBI’s action on Kapoor.